Acceleration of growth in Europe and the Emerging Markets

The world economic recovery has continued during these last months. The momentum is now synchronised in both industrialised and emerging countries. We do expect this year and in 2018 growth rates well above their potential, however they might not accelerate anymore. Leading indicators are indeed not progressing further and seem to have reached their peak in several countries. The economic cycle does not show any significant imbalance for the moment, especially on prices. Inflation remains currently low, despite further falling unemployment rate. But in the coming months, a slight acceleration in consumer prices should be expected, due to rising wages in countries were the labour market is overheating.

On the financial markets, optimism continues, in line with the current dynamic economic growth rate in the absence of inflation. However, risks have not totally disappeared: industrial activity in China seems to have reached a ceiling and the absence of fiscal and financial policies in the US prevents an acceleration of the GDP. Furthermore a faster than expected monetary tightening by the Federal Reserve could result in strong financial tensions in the Emerging Markets. Eventually world economic growth should reach 3.8% this year and 3.9% in 2018, which is respectively 0.3 and 0.1 additional point of percentage to our Q3 forecasts.